Tuesday, 15 May 2012

Young people want jobs stupid!

The broader measure of unemployment provides a rolling quarterly average of the
number of people who have looked for work in the past four weeks and ready to
work in the next two.

The time frame is January to March which coincides with the start of the double
dip recession when GDP fell by 0.2%.

Signs of further weakness in the youth labour market should show up on
Wednesday although the fact that unemployment is a lagging indicator suggests
the worst is yet to come.

From 18, when young people are entitled to claim JSA, either they enter
full-time higher education or they have to find a job - preferably with an
apprenticeship - but any will do.

In short, present policy assumes young people not on the full-time HE track
just want jobs.

If this is the case both the Coalition Government and the Labour opposition
have a monumental challenge on their hands.

Currently, some 2.7m 18 to 24 year olds are in employment and not in full-time
education. Nearly 95% of them are in jobs - full time and part time - because
self-employment makes up a tiny fraction of this age group.

Since the summer last year, however, there are 60,000 fewer 18 to 24 year olds
in employment and not in full time education. There are 654,000 unemployed 18
to 24 year olds not in full time education and a further 595,000 who are
inactive and not in full time education. Yet, the total number of vacancies in
the entire economy is less than 500,000.

Even if every job vacancy was earmarked for 18 to 24 year olds, we would still
have more than half a million unemployed or inactive.

Growth is the answer to youth unemployment. But there is a difference between
short-term and long-term strategies for growth.

Short-term growth requires increasing demand in the economy. Long-term growth
requires reforming the supply side of the economy.

If Chelsea winning the Champions
League, England
winning EURO 2012, Andy Murray winning Wimbeldon and Team GB winning medal
after medal at the Olympics cannot persuade consumers to spend and businesses
to invest, the Coalition will have to act to boost jobs in the Autumn
Statement.

Indeed, two specific immediate measures should be on the agenda.

Firstly, the Coalition should expand capital spending on social housing coupled
with recruitment of 18 to 24 year olds including apprentices. If this requires
redirecting 24+ apprenticeship funding to 18 to 24 year olds then so be it.

Secondly, consideration should be given to a cut in employers' national
insurance contributions to 18 to 24 year olds from 13.8% to 10.0% time limited
for two years.

And although both of these measures could increase the deficit in the
short-term the announcement that the reduction would be time limited should
reassure the money markets.
Longer term, the Coalition Government does need to ensure young people are
competitive in a labour market where adults are having to work longer.

It should ask the Low Pay Commission to assess the impact of a minimum wage for
18 to 24 year olds set at below £6.19 per hour on employment prospects for this
age group.

Less convincing is the proposal announced in the Queen's Speech to make hiring
and firing easier for employers. The result might be to add to labour market
insecurity and cause less demand in the economy as young workers 'save what
that can' for fear of being given the push.

And yet, the choice offered to young people must be wider than 'full-time
higher education for the best' and 'job for the rest'.

The reality of this choice is that there are two few jobs around, fewer still
with apprenticeships and a work-first regime directed at getting young people
off JSA into any old job however temporary or low paid.

For some young people who are not on the royal route of GCSEs, A levels and
full-time HE, the opportunity to study full-time in FE - with appropriate
maintenance support - is preferable to weekly trips to the job centre and the
prospects of short-term, low paid, low skilled part-time jobs.

Mark Corney is policy adviser to CfL. He writes in a personal capacity.

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